Tax Department Allows Updated Return Filing in ITR-3 and ITR-4 for AY 2021-22 and 2022-23

The Income Tax Department has enabled taxpayers to file updated income tax returns (ITR-U) for AY 2021-22 and 2022-23 using ITR-3 and ITR-4. This gives individuals and businesses another chance to correct:

• Missed income reporting
• Income declared under the wrong head
• Errors in tax credits or depreciation

This facility was introduced under Section 139(8A) of the Income Tax Act, 1961.

Cost of Filing ITR-U

Filing an updated return comes with an extra cost:

• Taxpayers may need to pay up to 50% additional tax and interest on the extra income reported.

Who Should File ITR-3?

ITR-3 is meant for individuals and HUFs with:

• Business or professional income
• Share trading (including F&O)
• Capital gains
• Foreign assets or income
• Partnership income
• Income above ₹50 lakh

Key Updates in ITR-3 (FY 2024-25):

• Separate capital gains reporting before and after July 23, 2024
• Option to claim capital loss on buyback vs. dividend income
• New section for cruise business income (44BBC)
• Higher disclosure requirements for income above ₹1 crore

Who Should File ITR-4?

ITR-4 (Sugam) is for resident individuals, HUFs, and firms (not LLPs) with income up to ₹50 lakh under presumptive taxation (44AD, 44ADA, 44AE).

Restrictions:

Cannot be used if the taxpayer is:

• A company director
• Holding unlisted shares
• Having foreign assets/income
• Earning agricultural income above ₹5,000
• Having deferred tax from ESOPs

ITR-U Filing Timeline

• Taxpayers have 48 months from the end of the financial year to file ITR-U.
• For example, for AY 2025-26, the deadline is March 31, 2030.

Read More: ITR Filing FY2025: Under-Reporting High-Value Transactions – Here Is What It Could Cost You.

Who Cannot File ITR-U?

You cannot file if:

• The return shows nil income or a loss
• It reduces your tax liability or increases refund
• It involves search, seizure, or ongoing prosecution cases
• You have already filed an updated return for that AY

Conclusion

With the inclusion of ITR-3 and ITR-4, the Income Tax Department has widened the scope of updated returns. This move encourages taxpayers to voluntarily correct mistakes while ensuring greater compliance and transparency in the tax system.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.